US Shutdown Crashes Crypto Sentiment as Gold and Silver Rally

Prediction markets on Polymarket now price the odds of a shutdown by January 31 at roughly 78%, a dramatic increase from just 10% three days earlier.

Amid growing risks of another US government shutdown, investors are flocking to safe-haven assets amid mounting uncertainty. The Crypto Fear and Greed Index now shows ‘Extreme Fear’. Sentiment had recovered to neutral less than a week ago.

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US Policymaker Deadlock Pushes Shutdown Odds on Polymarket Higher

There is mounting partisan deadlock over funding for the Department of Homeland Security (DHS). The surge in probability has coincided with sharp gains in gold and silver, mirroring patterns observed during the record 43-day shutdown that ended in November 2025.

The House of Representatives passed a stopgap funding bill by a vote of 341 to 81. Yet, Senate Democrats, led by Majority Leader Chuck Schumer, have refused to advance the bill. Notably, DHS funding, particularly for Immigration and Customs Enforcement (ICE), remains attached.

“Democrats sought common-sense reforms in the Department of Homeland Security spending bill, but because of Republicans’ refusal to stand up to President Trump, the DHS bill is woefully inadequate to rein in the abuses of ICE. I will vote no,” Schumer said in a post.

The deadlock has created a “data blackout.” Delayed economic indicators such as CPI and jobs reports complicate the Federal Reserve’s policy and risk models. This could push market volatility higher.

“The government will shut down in 6 days. The last time they shut down, gold and silver jumped to new all-time highs. But if you’re holding other assets like stocks, you need to be extremely careful… Because we’re heading into a total data blackout,” wrote NoLimit, a macro analyst and popular account on X.

Indeed, Polymarket bettors see a similar outcome, wagering a 76% probability that there will be another US government shutdown by January 31.

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Similar bets include a 77% chance of a US Government funding lapse on January 31. On the off chance that it does happen, analysts anticipate four key threats:

• Delayed economic data
• Potential credit downgrades
• Liquidity freezes, and
• A GDP contraction of approximately 0.2% per week if the impasse persists.

“Most people are ignoring this, but the shutdown risk is getting real. The deadline is closing, and funding talks are stuck. When the government slows, everything else slows with it. Paychecks get delayed, contracts stop moving, decisions get pushed. Markets always brush it off at first, and then suddenly they don’t,” added DeFi researcher Justin Wu.

Precious metals have been the clearest beneficiaries. Gold recorded a new all-time high above $5,000 per ounce, trading for $5,041 as of this writing. Meanwhile, the silver price broke the $100 barrier for the first time, trading at $103.07 per ounce as of this writing.

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Beyond safe-haven demand, structural supply constraints, industrial demand for silver in electronics and solar sectors, and broader geopolitical concerns also fuel the rally.

Historical precedent reinforces this trend because during the prior shutdown in late 2025, gold climbed from roughly $3,858 to over $4,100 per ounce. Silver, on the other hand, tested $54, reflecting a combination of risk-off buying and uncertainty premiums.

Crypto markets, by contrast, have shown volatility amid the uncertainty. Bitcoin, which fell by roughly 20% during the 43-day 2025 shutdown, remains sensitive to liquidity shocks and delayed economic data, prompting caution among investors.

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A prolonged shutdown could exacerbate stress across repo markets and money funds, with a few bettors predicting the prospective government shutdown lasting up to two months.  

While the risk is high, a shutdown is not inevitable. Congress could prevent it by passing the remaining appropriations bills or extending funding via another continuing resolution.

“…we had the longest shutdown in history just a couple of months ago…clearly there is not an appetite to do this again,” said Rachel bade, co-host at The Huddle.

Recent bipartisan deals have lowered the odds, but with the Senate deadlocked and less than a week before the January 30 deadline, market participants are pricing in a significant probability of disruption.

Against this backdrop, Polymarket traders continue to place bets, and gold and silver prices are climbing. This is based on the perception that in periods of political gridlock and fiscal uncertainty, safe-haven assets historically provide a buffer.

However, it is also worth noting that markets can swing violently in either direction depending on the resolution of the standoff. Therefore, investors should conduct their own research.